Saturday, August 7, 2021

Haggling

Haggling is an ancient tradition and a habit developed over the ages.  Today, it is often against the consumer as a weapon.

In economics 101 we are told about optimal pricing.  In a perfect marketplace, the rich man pays more for a car than the poor man did.  And General Motors, from the 1930's to the 1970's did just that - offer a car for "every purse and purpose" and while a Cadillac might cost four times what a base Chevy did, it wasn't four times as expensive to make.  Haggling works the same way.  The merchant offers a product at an unreasonably high price (for most people) which is today what we would call "Manufacturer's suggested retail price."

From that price, the merchant haggles - he sizes up his prospect and tries to figure out what is the highest price he can offer without having the customer walk away.  In the market in Casablanca in 1942, this meant offering lower and lower prices until the customer bought.  Today, it means sales and rebates and discounts and coupons - as well as offering products in different levels or brands to maximize profit from wealthier (or status-seeking) buyers.

And this is where haggling has gone South.  In the old days, you haggled face-to-face with a merchant and literally could smell their breath.  Today, it is all done by computers who read your e-mails and then figure out, from keywords, whether you are desperate or not to buy a new Jet Ski.  Once they get inside your brain,  you really can't haggle anymore.

Similarly, we have a friend who likes to shop - and find "bargains" which sometimes she does - sometimes even for things she really wants or needs.  Sometimes.  Other times, she is lured onto the rocks by the siren song of commerce - "90% off!  You can't afford not to buy at this price!"  It gives the appearance of haggling, without real haggling.

As a result, people end up haggling over things they don't really want or need, or worse yet - we are led to believe we are haggling, when in fact, we are being led down a well-worn path to the abattoir and the captured-bolt gun.  For example, again, the car dealer.  You go in thinking you are not going to pay sticker price.  I hope not!  Because no one ever does, or does so rarely.  You think you are getting a "deal" for a few hundred over invoice or maybe a few hundred under dealer invoice (because you  know, car dealers can sell cars at a loss!).   But the reality is, you have no idea what the dealer actually paid for the car, due to incentives and kick-backs.  Yes, even dealers get rebates!

So you haggle and "negotiate" and the end result is you pay a "meh" price for the car, like every other schmuck out there, but you either think you scored a "deal" or you have the uneasy feeling you were ripped-off.  It isn't real haggling, it is fake haggling, because you are just pretend negotiating, and the dealer is pretending as well.  He isn't going to mark-down a car for below cost unless he really is desperate - and that rarely happens.

Rebates, frequent flyer miles, cash-back, BOGOS - pretty much all of modern commerce - is based on this faux haggling model.  Perhaps the marketers know something about ourselves that we don't.  They know that we have an instinct to haggle, built-in to our brains and we can't shut it off.  So we are drawn into making deals with merchants by going to sales and getting 2-for-1 or whatever.  It stimulates the part of our brain that likes to haggle, without actually offering any real bargains - that are not offered to the other great unwashed masses.  But they let us think we did score some kind of deal!

I am not sure what made me think of this, but my friend who likes to "shop" would, in another era, be right at home in Casablanca in 1942, haggling over the price of every purchase and going home with a basket of goods and thinking, no doubt, they got a "good deal" - and back then, they probably did.

Today?  Not so much.  They've gotten into our heads via Social Media and our smart phones, so they know what we want and whether or not we are desperate to buy - or how desperate.  It isn't like the old days of haggling - its gone mainstream and computerized.  And we are seeing only the beginning of this, too.  Already, I sense how prices change on the Internet (Hello, Wayfair?) on an hour-to-hour or even minute-to-minute basis depending how many times I click on something or how many similar items I look at. When I was looking at hot tubs, it seems the prices changed on a daily level - and by hundreds of dollars, too!  It is kind of fascinating, sort of, like turning over a rock and seeing all the creepy-crawlies underneath.  Only some of those creepy-crawlies are in our brain.

And I am not sure there is an answer to any of this, other than to consume less, and if you've been researching some purchase online, use someone else's phone